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Disagreements between businesses happen all the time. Whether it’s a dispute over payment, performance, or terms in a contract, it can be tempting to jump straight into legal action. But filing a lawsuit should never be the first move. Taking a few deliberate steps beforehand can help protect your business, clarify your position, and even lead to a better outcome, whether that’s through court or outside of it. Below are the steps we recommend New Jersey businesses take before pursuing commercial litigation.
Review the Terms of the Contract or Agreement
The first thing to do is go back to the original contract. Most business disputes stem from some kind of agreement, whether written or verbal, and that agreement may contain important terms that affect your rights.
Pay close attention to:
- Dispute resolution clauses (arbitration, mediation, or court)
- Choice of law and forum provisions (which state’s laws apply and where a lawsuit must be filed)
- Notice requirements (do you need to send a demand letter first?)
- Time limits or termination clauses
Overlooking a small clause can impact your ability to bring a claim or defend one. If you’re unsure how to interpret the language, get a second set of eyes on it. Contracts are often more detailed than they appear.
Collect and Organize All Relevant Documentation
Before involving attorneys or courts, it’s a good idea to get your records in order. Supporting documents can tell the full story and back up your side of the dispute.
You’ll want to gather:
- Contracts or purchase orders
- Email correspondence
- Invoices, payment receipts, or bank statements
- Performance records or delivery logs
- Internal memos or meeting notes
If possible, organize everything in chronological order and create a simple timeline of key events. This will help your legal team quickly understand what happened and when. Good documentation can also increase your credibility during settlement talks or court proceedings.
Attempt to Resolve the Dispute Informally
Not every business dispute needs to go to court. In fact, many can be resolved more quickly and cost-effectively by talking things through.
Consider:
- Reaching out directly to the other party
- Proposing a written settlement or repayment plan
- Asking a neutral third party to help mediate the disagreement
If you’re unsure about what to say, an attorney can help you draft a demand letter that lays out your position clearly without escalating things unnecessarily. Courts often look more favorably on parties who tried to settle in good faith before filing suit.
Consult With an Attorney to Evaluate Your Options
Once you’ve reviewed your contract and gathered your records, speak with a business attorney to go over your options. Litigation can be a long and expensive road, so it’s worth understanding your position from the outset.
An attorney can help you:
- Evaluate the strength of your claims or defenses
- Calculate potential damages
- Identify legal risks or weak points in your case
- Consider possible counterclaims from the other side
You’ll also want to discuss the time and resources required to move forward with a lawsuit. Having a clear understanding of what lies ahead can help you make informed decisions for your business.
Consider the Financial and Business Impact
Even if you have a strong case, it’s important to weigh the broader impact litigation may have on your company. Legal disputes can be expensive and time-consuming, and they may affect your operations in ways you haven’t considered.
Ask yourself:
- How much is at stake, and what are the chances of recovery?
- Will this affect key relationships or ongoing contracts?
- Could publicity around the lawsuit harm your reputation?
You may also want to explore alternative dispute resolution, such as mediation or arbitration. These options are often faster and more private than going to court, and they can still result in a legally binding outcome.
Be Strategic Before Taking Legal Action
Commercial litigation can be a powerful tool, but it works best when it’s used strategically. Taking the time to review your contracts, organize your documents, and speak with an attorney can put you in a much stronger position, whether you end up filing a lawsuit or not.
At Gearhart Law, we help New Jersey businesses protect their interests before and during litigation. If you’re facing a business dispute and want to understand your legal options, contact us today to schedule a consultation.